FY 2009's third-quarter net signed contracts of approximately 837 units and approximately $447.7 million rose 3% in units and declined 5% in dollars compared to FY 2008's third-quarter totals. The Company's FY 2009 third-quarter home building deliveries and revenues of approximately 792 units and approximately $461.3 million declined 36% in units and 42% in dollars, and its third-quarter-end backlog of approximately 1,626 units and approximately $930.7 million declined 37% in units and 47% in dollars, compared to FY 2008's third-quarter results.

Robert I. Toll, chairman and chief executive officer, stated: "Although our industry continues to face significant challenges, we are encouraged by the increase in the number of net contracts signed this quarter. This marked the first time in 16 quarters - dating back to FY 2005's fourth quarter - that our net contracts exceeded the prior year's same quarter. It also marked the first quarterly sequential unit increase in our backlog in more than three years.

"The increase in net contracts was generated despite our having approximately 22% fewer selling communities during FY 2009's third quarter than during FY 2008's third quarter: On a per community basis, our net contracts were up approximately 32%. Despite the fewer selling communities, our FY 2009 third-quarter gross signed contracts of 915 units were down just 9% from the previous year's third quarter (compared to a 40% decline in FY 2009's second quarter versus FY 2008's), and up 16% on a per community basis. This improvement, coupled with our lowest cancellation rate in over three years, drove the increase in net signed contracts.

"Typically, we sign fewer contracts in our third fiscal quarter than in our second, because our second quarter, which runs from February 1 through April 30, encompasses our primary selling season. This fiscal year, however, third-quarter net contracts exceeded second-quarter net contracts by 44%; this has occurred only three other times since we went public in 1986.

"Although some of our markets are still stuck in the mud, many are improving. While we have to work very hard for our sales, it does feel as if the fence sitters are looking for reasons to jump in on the side of buying. Price is no longer the overwhelmingly dominant factor.

"It appears that those taking this step today have more confidence than one year ago. This is reflected in our third-quarter rate of conversions of non-binding deposits into signed contracts, the highest since FY 2005, and our declining contract cancellation rate. FY 2009's third-quarter cancellation rate (current-quarter cancellations divided by current-quarter signed contracts) was 8.5% versus 19.4% in FY 2008's third quarter. This was our lowest cancellation rate since the second quarter of FY 2006, and is approaching our historic average of approximately 7% since going public.

"While the statistics above cannot be considered determinative of the luxury segment's recovery, or that of the overall home building industry, we believe they are more indicative than anecdotal.

"Many markets feel better than they did six months ago. The consumer interest we saw in April and May leveled off a bit from mid-June through mid-July, but has regained momentum more recently. As the supply of unsold housing inventory shrinks nationwide and, if consumer confidence continues to improve, we should see stronger demand: It has already positively impacted our pricing power as we are reducing incentives in many markets."

Joel H. Rassman, chief financial officer, stated: "We retired $295 million of public debt in our third quarter and now have no public debt maturing through FY 2011 and under $50 million maturing in FY 2012. We ended FY 2009's third quarter with approximately $1.65 billion of cash, compared to $1.96 billion at FY 2009's second-quarter-end, and $1.50 billion one year ago. The fluctuation in our cash position during the past two quarters was primarily attributable to our second-quarter issuance of $400 million aggregate principal amount of Senior Notes due October 2017 and the use of $304 million of cash in our third quarter for the retirement of debt and related costs.

"After adjusting for the third-quarter debt retirement, we generated approximately $100 million of cash from operations, paid down $32 million of project-related mortgage debt and paid $70 million of taxes in FY 2009's third quarter. At FY 2009's third-quarter-end, we also had $1.35 billion available under our $1.89 billion 31-bank credit facility, which matures in March 2011.

"While we have not yet finalized our impairment analysis, we estimate that pre-tax write-downs related to operating communities, land and land options, and joint ventures in FY 2009's third quarter will be between $90 million and $160 million. Included in this range of impairments are significant write-downs on certain land parcels targeted for disposition; these parcels are non-strategic and may trigger tax losses which may be carried back against prior taxable income. This compares to impairments of $119.6 million and $156.6 million in FY 2009's second and first quarters, respectively. In addition, although the Company has not yet finalized its analysis, we anticipate we will record a deferred tax asset valuation allowance against a substantial majority of our deferred tax asset in the third quarter of FY 2009.

"Given the significant uncertainty surrounding sales paces and prices, cancellation rates, market direction and numerous other aspects of the overall economy, we are not comfortable offering earnings guidance or updating other guidance at this time."

The results announced today are preliminary and unaudited. The Company will announce final third-quarter and nine-month results, including earnings, on August 27, 2009.

Toll Brothers' preliminary financial highlights for the third-quarter and nine-month periods ended July 31, 2009 (unaudited):

     *  The Company's FY 2009 third-quarter net contracts of 837 units,       or approximately $447.7 million, increased 3% in units and       declined 5% in dollars compared to FY 2008's third-quarter net      contracts of 812 units, or $469.9 million.    *  FY 2009's nine-month net contracts of approximately 1,685 units,       or approximately $873.8 million, were off by 29% and 35%,       respectively, compared to FY 2008's nine-month net contracts       of 2,388 units, or $1.34 billion.    *  The Company signed 915 gross contracts totaling approximately       $502.6 million in FY 2009's third quarter, a decline of 9% and       15%, respectively, compared to the 1,007 gross contracts       totaling $588.1 million signed in FY 2008's third quarter.    *  The Company signed 2,081 gross contracts totaling approximately      $1.16 billion in FY 2009's first nine months, a decline of 34%       and 38%, respectively, compared to the 3,148 gross contracts       totaling $1.89 billion signed in FY 2008's first nine months.    *  In FY 2009, third-quarter cancellations totaled 78. This       compared to 161, and 157, respectively, in FY 2009's second       and first quarters; 233, 195, 308, and 257 respectively, in       FY 2008's fourth, third, second and first quarters; 417, 347,       384, and 436, respectively, in FY 2007's fourth, third, second       and first quarters; and 585 and 317 respectively, in FY 2006's       fourth and third quarters. FY 2006's third quarter was the       first period in which cancellations reached elevated levels       during the current housing downturn.    *  FY 2009's third-quarter cancellation rate (current-quarter       cancellations divided by current-quarter signed contracts) was       8.5%, the lowest since FY 2006's second quarter.